This presentation explorex pricing options that lets you right-size services to the individual needs of your clients and build in healthy profit margins for you. Business Owners will learn: How to make sure you’re not leaving money on the table and selling yourself cheap, while giving scope for upselling in the future. Commercial Managers will learn: How to position and sell recurring revenue services to differentiate your company so you win more mobile app projects and lock in recurring revenue services from day one.

1. Pricing Mobile App Services
THE BUILDING BLOCKS OF RETAINER BASED INCOME
Webinar 3 of 3

2. Presenters on Todays Webinar
Founder of Kumulos
Previously Commercial Role with Large Mobile App Dev Business
15 years working with businesses to productize service offerings
Head of Content
Journalist and Social Media
Tech industry for the last 22 years
Scott “the Chair” Calonico
Bob “the Content” Lawson

3. Webinar #3 of 3
• www.Kumulos.com/webinars
– Recording of Webinar 1 & 2 live
– Recording of Webinar 3 (next couple of days)
• Next up
– Delivering Mobile App Services at scale. November 30th
– Register early – space is limited

4. Today, we’ll cover…
• Revisit what we’ve covered already in #1 & #2
• How to Tackle Pricing App Services
– Pricing Methods
– How to Determine your Pricing
– How to know when the price is right

5. Backdrop
Mobile App Development Business/Consultants, building apps
for Enterprise, SMB’s, Start-ups and App Entrepreneurs
• Results from year-long research
• Talking to many, many Mobile App Development Businesses across
the world.
– their challenges, their approach – how they solved the problem
• Common practice and building blocks for success

6. Look back at what we have covered so far

7. The Drown or Swim Challenge
Project
Income
TIME
PROJECT #1 PROJECT #2 PROJECT #3
Running Costs

8. The Drown or Swim Challenge
Project
Income
TIME
PROJECT #1 PROJECT #2 PROJECT #3
Running Costs
Profit Profit Profit
Cutting
into cash
reserves
Cutting
into cash
reserves

9. The Drown or Swim Challenge
Project
Income
TIME
PROJECT #1 PROJECT #2 PROJECT #3
Running Costs
SERVICES REVENUE

10. The Drown or Swim Challenge
Project
Income
TIME
PROJECT #1 PROJECT #2 PROJECT #3
Running CostsSERVICES REVENUE
Running costs

11. Customer Goals - Typical App Life Cycle
2-3 Years2-3 Months2-3 Weeks
CREATIVE BUILD OPTIMIZE
IDEATION
DESIGN
BUILD TEST DEPLOY
App PROJECT LIFECYLE
Acquisition
Engagement
Retention
Retire
Maintenance & Evolve
1
2
3
4

12. Service Level – Match to Client Priorities
1
2
3

13. Right fit YOU and Right fit YOUR CLIENT
Reactive
Proactive
Managed
$
$ $
$ $ $ $
Service Blocks
ServiceLevels
Maintain Acquire Engage Retain
The Optimization Service Stack
1
2
3
1 2 3 4

14. Example – Client #1
Reactive
Proactive
Managed
$
$ $
$ $ $ $
Service Blocks
ServiceLevels
Maintain Acquire Engage Retain
The Optimization Service Stack

15. Example – Client #2
Reactive
Proactive
Managed
$
$ $
$ $ $ $
Service Blocks
ServiceLevels
Maintain Acquire Engage Retain
The Optimization Service Stack

16. Example – Client #3
Reactive
Proactive
Managed
$
$ $
$ $ $ $
Service Blocks
ServiceLevels
Maintain Acquire Engage Retain
The Optimization Service Stack

17. Customer Goals - Typical App Life Cycle
2-3 Years2-3 Months2-3 Weeks
CREATIVE BUILD OPTIMIZE
IDEATION
DESIGN
BUILD TEST DEPLOY
App PROJECT LIFECYLE
Acquisition
Engagement
Retention
Retire
Maintenance & Evolve
BUT YOU OFFER THIS

18. Pause – In Summary
• Customers will buy services that help them
drive the right outcome from their app
• Sell these services right at the start
• Position services progressive
• Make them tangible/visible.

19. PRICING APP SERVICES

20. 5-7 times more
expensive to win a
new customer than to
win follow on work
from an existing
customer

21. Mobile App
Developers are bad…
really bad at winning
follow on work from
customers

22. BUILDING BLOCKS FOR SERVICE PRICING

23. Making the Price Right
1. Value (to your customer) based Pricing
2. Value (to you) based Pricing
3. Cost Plus Pricing.

24. WHAT’S THE
RIGHT
APPROACH?

25. IT DEPENDS ON
WHAT YOU WANT
TO ACHIEVE

26. NOT VERY
HELPFUL!!!

27. But wait a minute… there’s something in this.
Build Strong recurring revenue for your businessBuild
Stay in touch & retain customers for longerStay in
Win follow on workWin

28. Different ways to achieve regular income
• Pre-paid Block Hours/Draw Down
– Good way allocate resources and cover Developers costs
– Can be difficult to plan around New Client work
• Reselling Vendors Services
– Low effort
– Low margin/low value add
• Retained Consultancy/Trusted Advisor
– High value/High Margin
– Value can decay over time
• Managed Teams or Skills Augmentation
– Offshore/nearshore
– In your office
– In your client office

29. PERFECT WORLD – The PERFECT CUSTOMER
• Apps are strategic
• They understand this is software developed
– The job is never done
• They get the fact that there is
– cost to build
– cost to maintain
– services costs
– cost to continually evolve.
• They have the cashflow and ongoing commitment… AND IF THEY DON’T…

31. The customers that kill your business
Project
Income
TIME
PROJECT #1 PROJECT #2 PROJECT #3
Running Costs
Profit Profit Profit
Cutting
into cash
reserves
Cutting
into cash
reserves

32. #1 Value (to your customer) based pricing
MVP Build
Costs
Income
Ongoing App Services & Maintenance Costs
Time

33. #1 Value (to your customer) based pricing
• Customers will pay a % of the initial build cost as ongoing running costs
• The amount they will pay will depend on a number of things including
– the ROI of their app to their business
• the money they make
• the money they save
– How strategic it is to their business
– Their cash flow (ability/willingness to pay)

34. Structure - Service Blocks and Service Levels
Reactive
Proactive
Managed
$
$ $
$ $ $ $
Service Blocks
ServiceLevels
Maintain Acquire Engage Retain
The Optimization Service Stack
$
$ $
$ $ $ $
$
$ $
$ $ $ $
$
$ $
$ $ $ $
More
Strategic
Less
Strategic

35. The Service Value Curve

36. The Math
App Build MVP = $25,000

37. The Service Value Curve

38. The Math
$2,500 a monthManaged 10%
$1,250 a monthProactive 5%
$250 a month
Reactive
1%

39. Is it worth it?
• 10 customers on proactive service retainers
• 10x $1,250 = $12,500 a month = $150,000 pa
• Running costs – rent, admin costs etc

40. Value Based Pricing - Summary
• Base costs on the MVP build budget
• Overlying the Value they put in their app
– % of cost saving or % of revenue gain
• Overlying how strategic your role will be.
• Suggestion - Start reactive and become more
strategic

41. Advantages of this approach
• Low entry level price – make it easy to buy
• Different price points to meet different clients needs
• Tiered Service offerings – progressive price
• Right fit the price to the clients budget – without discounting
• Clear – In Scope & Out of Scope
– Expectation management
– Clear line in the sand for the upsell.
• You can offer the width of services with no change to your business
model by just sending them a monthly report.

42. Drawbacks of this Approach
• It can be complex
• It doesn’t give you a defined rate card
• You need to understand the customers
business case

43. #2 Value (to you) pricing
• What you charge depends on what you want
in return.
– Sell at a profit
– Sell at cost
– Sell at loss

44. Bait the hook…

45. … to land the big fish

46. Sell App Services at cost…
Initial
build
(MVP)
Income
V1.1 V1.2
V1.3
V1.4
V1.5
Costs

47. Sell App Services as a Loss-Leader…
Initial
build
(MVP)
Income
V1.1 V1.2
V1.3
V1.4
V1.5
Costs

48. Structure - Service Blocks and Service Levels
Reactive
Proactive
Managed
$
$ $
$ $ $ $
Service Blocks
ServiceLevels
Maintain Acquire Engage Retain
The Optimization Service Stack
$
$ $
$ $ $ $
$
$ $
$ $ $ $
$
$ $
$ $ $ $

49. Value to you Pricing - Summary
• Good way to stay close to your clients
• Your Interests and Your Clients Interested
aligned
• High profit potential from your client projects
• Long term customer retention

50. Advantages of this Approach
• They are a customer… so you know them
– You know the project
– You can cost it accurately
– Keen price AND with good profit
• No cost of sale for follow on projects
• You can schedule work easier

51. Drawbacks
• There’s no guarantee you can find projects
• You’re not making margin from services
• You need to be careful your clients know the
boundaries

52. #3 Cost Plus Pricing
• How much will it cost to deliver the service
• Add your margin
• = your price.
• The crudest… the easiest… probably the
weakest approach

53. Services - Costs plus your Margin
People
Premises
Systems/consumables
Fully loaded Billable staff
Senior Staff Premium
Junior Staff Rate
Account Management
Project Management
Share of Operational Staff
Sales, accounts, the CEO
Rent, heat, light, internet, computers,
systems and operational software
Software used to directly deliver the app - Azure/AWS, App services (eg
Push Notifications, Analytics packages etc)
Margin
The Margin you need to turn a profit

54. Honestly…. How do you price projects
• Finger in the air
• How much will the client pay
• What will the competition charge
• A bit of science
– (Resource Requirements/“Man” days)*(labor cost+margin)
• Other?

55. Advantages of this Approach
• Probably familiar
• Easy to price and build in a margin
• Build a clear rate card of services

56. Drawbacks
• One size fits all approach
• Risks leaving money on the table

57. In real life – a bit of all 3
Cost +
Your
Value
Customer
Value
Know your costs and your
target customer
profitability
Set your price point to fit
your desired outcome.
Base your price on what
the customer is likely to
pay

58. SETTING YOUR RIGHT PRICE

59. Getting to the right price

60. Understand your
regions price variance

61. Getting the Balance right
Not leaving money on the table
Customer gets value AND you get what you need

62. Too Low
• Customers wont see value
• Leaving potential untapped
Too High
• Customer Resistance
• Customer Churn (opposite of
what you set out to achieve)

63. Create 1 or 2 Service Packages
Test them out…. With friendly customers
“We are thinking about offering this to our customers… is this
something that you would think others in your position would value?”
“We are thinking about pricing this between $XXX and $YYY, do you
think these services at that price would create value for them?”
If it doesn’t work first time
Learn – Refine – Retry…. Don’t just give up
Test the water…

64. Suggestion…
• Service offerings at different price points
• Scale up/down offering to fit budget/need
• Offer 3 month discounts to let them see value
Or
• Start low and scale up their service as their needs
grow.

65. Some thoughts to finish…
• No magic formula
• Mix of Customer Value, Your Value and Cost +
• Market Testing is Key
• Be bold… but not too bold

66. A bonus idea to end on…
Success here isn’t judged just on Residual income…
but also on helping you win new clients…
The sort of clients you want to work with…
Clients that are bought into an ongoing investment
and relationship with you.

67. To help you get going…
• Playbooks
• Services Guides
• Marketing Material

68. Kumulos White-label Service Delivery Platform

69. Future Webinars
How to Deliver Mobile App Services at Scale
November 30th 11am (Eastern US)
https://www.kumulos.com/webinars
Spaces are limited and filling up fast – register today

70. Free one hour telephone consultation
• Available to everyone on this webinar today.
• First 5 – limited offer first come first served
• Deeper dive
– Fit the approach to unique aspects of your business
– With your wider management team.
• Contact your sales rep or email info@Kumulos.com

71. Questions?
www.kumulos.com
info@kumulos.com

72. Thank You
See you next time
November 30th 11am Eastern
www.kumulos.com
info@kumulos.com